tag:blogger.com,1999:blog-2948538160252327076Tue, 20 Mar 2018 00:04:35 +0000UK economyUK bankingUKcrashUK house pricesUK housinginflationfinancemoneyDebtBank of Englandinterest ratesUS economyUS housing bubblebankruptcybuy-to-letinsolvencybuilding societiesEULondoncredit crunchhousing bubblecredit cardsdemographicseuromortgagesinflation targetingirish property bubblereal estatecentral bankscommercial propertyspanish property bubblemortgage equity withdrawalprice-to-income ratiofinlandmortgage-equity withdrawalEstate agentsIcelandIrelandpensionsECBFSAicesaverentingNorthern IrelandGreeceHouse prices UKHIPsWorld Economic ForumUSALondon propertiesBanking CorruptionJapanWalesChinaScotlandUK Bubble UK Economyhttp://ukhousebubble.blogspot.com/noreply@blogger.com (Alice Cook)Blogger2459125tag:blogger.com,1999:blog-2948538160252327076.post-5689947648555243861Fri, 20 Jul 2012 04:13:00 +00002012-07-20T05:13:43.984+01:00UKUK economyTurning the Games into Gold<object id="flashObj" width="595" height="390" classid="clsid:D27CDB6E-AE6D-11cf-96B8-444553540000" codebase="http://download.macromedia.com/pub/shockwave/cabs/flash/swflash.cab#version=9,0,47,0"><param name="movie" value="http://c.brightcove.com/services/viewer/federated_f9?isVid=1" /><param name="bgcolor" value="#FFFFFF" /><param name="flashVars" value="videoId=1743404062001&linkBaseURL=http%3A%2F%2Fwww.economist.com%2Fblogs%2Fschumpeter%2F2012%2F07%2Fcashing-olympics&playerID=1180743010001&playerKey=AQ~~,AAABDH-R__E~,dB4S9tmhdOrgQJ-vz7N_KM-Fn5lQ8FIH&domain=embed&dynamicStreaming=true" /><param name="base" value="http://admin.brightcove.com" /><param name="seamlesstabbing" value="false" /><param name="allowFullScreen" value="true" /><param name="swLiveConnect" value="true" /><param name="allowScriptAccess" value="always" /><embed src="http://c.brightcove.com/services/viewer/federated_f9?isVid=1" bgcolor="#FFFFFF" flashVars="videoId=1743404062001&linkBaseURL=http%3A%2F%2Fwww.economist.com%2Fblogs%2Fschumpeter%2F2012%2F07%2Fcashing-olympics&playerID=1180743010001&playerKey=AQ~~,AAABDH-R__E~,dB4S9tmhdOrgQJ-vz7N_KM-Fn5lQ8FIH&domain=embed&dynamicStreaming=true" base="http://admin.brightcove.com" name="flashObj" width="595" height="390" seamlesstabbing="false" type="application/x-shockwave-flash" allowFullScreen="true" swLiveConnect="true" allowScriptAccess="always" pluginspage="http://www.macromedia.com/shockwave/download/index.cgi?P1_Prod_Version=ShockwaveFlash"></embed></object><br />Everyone will have fun and games except the British taxpayerhttp://ukhousebubble.blogspot.com/2012/07/turning-games-into-gold.htmlnoreply@blogger.com (Alice Cook)3tag:blogger.com,1999:blog-2948538160252327076.post-8179507991786682128Fri, 20 Jul 2012 04:04:00 +00002012-07-20T05:05:45.583+01:00UKUK economyCustoms officers offer some good old fashioned British hospitalityCustoms officers plan to walk off the job just one day before the Olympics. Moreover, they won't work any overtime throughout the games. <br /><br />I suppose it is yet another example of the moral degeneration of Britain. It really has become an island of vipers. Bankers can run up huge losses on failed bet, and then present the bill to the taxpayers. Market interest rates are manipulated, and the regulators and BoE claim they knew nothing. Journalists tap phones of crime victims and Policemen take cash for inquiries. MPS fiddle their expenses. Celebs avoid taxes while lecturing the rest of us on paying more.Security firms are paid huge management fees for incompetence. So why can't a customs officer squeeze a few bob into his pocket by making life difficult for a traveler?<br /><br />The answer should be "because it is wrong". But if we do not require a minimum standard of decency from a banker, a journalist, a politician, or a policeman, then why should we expect it from customs officers.<br /><br />In the end, we get the country we deserve.http://ukhousebubble.blogspot.com/2012/07/customs-officers-offer-some-good-old.htmlnoreply@blogger.com (Alice Cook)6tag:blogger.com,1999:blog-2948538160252327076.post-6848180005124392655Wed, 18 Jul 2012 04:26:00 +00002012-07-18T05:34:04.054+01:00UKWhy the ship is sinkingI can't muster any outrage at the story that G4S will pocket its multi-million management fee despite failing to hire enough guards, leaving it to the hard-pressed and much abused British Army to guard the Olympic stadium.<br /><br />There is no accountability anymore. We live in a country where scammers, blaggers and crooks run the show.<br /><br />So lets just laugh along, while Nick Buckles grabs his hefty slice of cash.<br /><br />Whose money is it anyway? It is only the taxpayer who is getting shafted here. <br /><br />As we all know, the taxpayer is one sorry friendless fool.http://ukhousebubble.blogspot.com/2012/07/why-ship-is-sinking.htmlnoreply@blogger.com (Alice Cook)6tag:blogger.com,1999:blog-2948538160252327076.post-5992164841853228214Wed, 18 Jul 2012 04:16:00 +00002012-07-18T05:32:19.348+01:00DebtAnother day, another banking scandalThe stories are coming thick and fast. Here is the latest from the FT:<br /><br /><i>The Securities and Exchange Commission sued Brian Stoker, a former director in Citigroup’s structured credit products group, last year alleging that he misled investors in a $1bn collateralised debt obligation called Class V Funding III, which was comprised of securities tied to home mortgages.<br /><br />The SEC alleges that he was negligent by failing to tell buyers that Citigroup had selected some of the assets and placed a $500m bet against them. The SEC is seeking disgorgement of profits and penalties from Mr Stoker. Unless a settlement is reached, jury selection is to begin Monday.<br /><br />Mr Stoker is one of four individuals the SEC has charged with misleading buyers of CDOs and the first to go to trial. Citigroup agreed to pay $285m, without admitting or denying wrongdoing, to settle the case, but the judge has not approved the pact.</i><br /><br />It is the numbers that get me.It is never $100,000 or even a million. These guys work in billions, and if they are playing it for laughs, they are running scams of a few hundred millions.<br /><br />There is another interesting aspect about these cases. The pattern is always the same. Once caught, the bank in question denies any wrong doing, while the authorities settle for a cash settlement rather than go for a prosecution. <br /><br />Getting caught doesn't really amount to much. No one gets jail time. Very few bankers ever lose their jobs. If the bank does something unethical, then its tough luck. They open the cheque book, write out a fine, say sorry and move on.<br /><br />It is an arrangement that doesn't offer much in terms of deterring bad behaviour.http://ukhousebubble.blogspot.com/2012/07/another-day-another-banking-scandal_18.htmlnoreply@blogger.com (Alice Cook)1tag:blogger.com,1999:blog-2948538160252327076.post-2919486433947200178Wed, 18 Jul 2012 00:20:00 +00002012-07-18T01:20:12.871+01:00UKUK bankingUK economywhy doesn't Britain make things any more?<!-- Start of guardian embedded video --><br /><!-- To prevent the video from auto playing set 'a=true' in the following line of code--><br /><iframe src="http://gu-embedded-video.appspot.com/?a=false&i=brightcove/poster/2012/7/10/120710afterausterity_6404336.jpg&f=brightcove/2012/7/10/120710afterausterity-16x9.mp4&u=/commentisfree/video/2012/jul/16/after-austerity-britain-make-things-video&tn=After Austerity: why doesn\'t Britain make things any more? - video:Video:1771828" style="border:0; overflow:hidden;" scrolling="no" width="460px" height="397px"></iframe><br /><!-- End of guardian embedded video -->http://ukhousebubble.blogspot.com/2012/07/why-doesnt-britain-make-things-any-more.htmlnoreply@blogger.com (Alice Cook)1tag:blogger.com,1999:blog-2948538160252327076.post-1599371229000279854Tue, 17 Jul 2012 12:01:00 +00002012-07-17T13:01:32.060+01:00UKUK bankingUK economyThe banking scandals just keep comingThis time it is HSBC and money laundering. From the BBC:<br /><br /><i>A US Senate probe has disclosed how lax controls at Europe's largest bank left it vulnerable to being used to launder dirty money from around the world.<br /><br />The report into HSBC, released ahead of a Senate hearing on Tuesday, says huge sums of Mexican drug money almost certainly passed through the bank.<br /><br />Suspicious funds from Syria, the Cayman Islands, Iran and Saudi Arabia also passed through the bank.<br /><br />HSBC said it expected to be held accountable for what went wrong.<br /><br />The damning report comes at a difficult time for the British banking sector, with standards and practices are under the spotlight</i><br /><br />That is a cracking collection of rogue states and assorted bandits; Iran, Syria, and Mexican drug cartels.http://ukhousebubble.blogspot.com/2012/07/banking-scandals-just-keep-coming.htmlnoreply@blogger.com (Alice Cook)2tag:blogger.com,1999:blog-2948538160252327076.post-2322335975942228108Tue, 17 Jul 2012 02:55:00 +00002012-07-17T13:32:00.993+01:00UKUK bankingUK economyThe FSA had one official watching over two of the countries' largest banksJust when you think you have heard it all, Lord Turner-head of the FSA-comes along with the following outrageous admission:<br /><br /><i>Part of the story of the FSA at that time is that we did have, we never used the word, a somewhat light touch regulation in particular in those areas of wholesale conduct.<br /><br />We were only to a small extent focused on the activities of investment banks. We only had about five people on Barclays and five people on RBS. <b>At one stage we only had one person that was shared between Barclays and RBS.</b></i><br /><br />Yes, that is right; there were times when the FSA had just one solitary official watching over two of the largest banks in Britain. One of the banks - RBS - subsequently failed, requiring a massive financial intervention from the government. The other - Barclays - has just been found guilty of manipulating its LIBOR submissions. Pre-crisis, the FSA simply didn't understand what was happening inside the UK financial system. They missed all the signs, because they couldn't be bothered to assign any staff to watch over these two behemoths.<br /><br />UK government could announce today the immediate closure of the FSA and the end of financial regulation. It would not make a jot of difference to the likelihood of avoiding another financial crisis. <br /><br />For all practical purposes, UK investment banks have been unregulated since the creation of the FSA. It begs the question, why start now? <br /><br />Increasingly, I'm beginning to realise that the financial crisis wasn't the result of a few deviant bankers. In the ten years before the crash, this country created the infrastructure for a financial disaster. We had a central bank that claimed to be focused only on inflation and had no interest in asset prices. Yet, when house prices started to wobble in 2005, the monetary policy committee promptly cut interest rates, sending house prices skyrocketing northwards. <br /><br />We had regulators who couldn't be bothered to actually staff teams to follow developments in the largest banks in the country. It is also a fair bet that the few solitary regulators assigned to look over the Barclays and RBS didn't have a clue what those banks were doing.<br /><br />And we had, inside each bank, a crew of corrupt bankers, who would, proverbially speaking, sell their grandmother to a slave galley, if they thought the transaction would pay them a groat. Over in Westminister, our elected MPs were busy writing up falsified expenses, and paid no attention to the unfolding catastrophe that the financial sector that was cooking up the river.<br /><br />What did the rest of us do? Those of us who owned property loved every minute of it. Those who did not were left out in the cold.<br /><br />Now, five years after the crisis, the truth about our desperate situation is beginning to slowly emerge. The economy is a wreck. It is uncompetitive; starved of credit, and cannot grow. Our government cannot reconcile its revenues with its expenditures and it is running up, year after year, massive and unsustainable deficits. The Bank of England is printing money in order to buy government bonds from the banks. For their part, the banks are depositing the money back into the Bank of England. Across the Channel, the economies of our main trading partners have begun to implode.<br /><br />Who is to blame? I'm beginning to think that it doesn't really matter any more. It's not as if anyone will be held to account, because we have collectively forgotten what it means to bear responsibility for our actions.http://ukhousebubble.blogspot.com/2012/07/just-when-you-think-you-have-heard-it.htmlnoreply@blogger.com (Alice Cook)10tag:blogger.com,1999:blog-2948538160252327076.post-8374089751251596471Mon, 16 Jul 2012 03:37:00 +00002012-07-16T04:53:27.091+01:00UKUK bankingUK economyUK Bank pre-tax profits higher now than before the crisisWho is paying for the crisis? It is not the banks, that is for sure. The Bank of England may have cut their interest rates to zero, but that hasn't stopped the banks from increasing their net interest rate earnings; the difference between what they receive on their loans and what they spend on interest payments on deposits and other financing operations. Since the crisis began,their interest earnings have increased by about £15 billion per half year.<br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="http://1.bp.blogspot.com/-oRDAoiCWGYs/UAOG7pj1boI/AAAAAAAADxI/teC1VOj0cMs/s1600/Bank-profits.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="465" src="http://1.bp.blogspot.com/-oRDAoiCWGYs/UAOG7pj1boI/AAAAAAAADxI/teC1VOj0cMs/s640/Bank-profits.gif" width="640" /></a></div><br />Now, the banks are carrying a large stock of bad loans. That is reflected in their higher impairment charts, which have increased quite a bit (see chart below).<br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="http://1.bp.blogspot.com/-kCXVcyJ3mEM/UAOG3li2WoI/AAAAAAAADxA/pgOqDGU_zgs/s1600/bank-impairments.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="466" src="http://1.bp.blogspot.com/-kCXVcyJ3mEM/UAOG3li2WoI/AAAAAAAADxA/pgOqDGU_zgs/s640/bank-impairments.gif" width="640" /></a></div><br />But what about the bottom line? Have banks seen a huge fall in pre-tax and provisioning profits? Of course not; profits are higher now than before the crisis. <br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="http://2.bp.blogspot.com/-ZvVVga4nT2w/UAOJlQpLbgI/AAAAAAAADxY/1Laf7bO8sI0/s1600/bank-pre-tax-profits.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="467" src="http://2.bp.blogspot.com/-ZvVVga4nT2w/UAOJlQpLbgI/AAAAAAAADxY/1Laf7bO8sI0/s640/bank-pre-tax-profits.gif" width="640" /></a></div><br />The financial crisis has been a sequence of scams perpetrated by bankers. In the 10 years after 1997, UK banks fired up an almighty housing bubble. By 2007, the banks were full of bad loans and dodgy investments. But that didn't affect the income streams of banks. Instead of sucking up the losses, banks went crying to the Government and the Bank of England. The Government handed over uncountable billions of pounds of tax payers money. The Bank cut interest rates to zero, screwing every depositor and saver in the country, and ensuring that banks became even more profitable after the crisis than before. <br /><br />Despite all the bad investment decisions, price fixing, miss-selling, money laundering and insider trading, the banks are doing better than ever. There are no consequences and no accountability. The bonuses continue to be paid, profits are up and no one except those chumps Bob Diamond and Fred the Shred lost their jobs. <br /><br />It is time to stop blaming the banks. It is our fault. We let them get away with it. We allowed them to walk all over us, to pick our purses and then walk away. We didn't stop them when they powered up the bubble. We allowed the banks run the economy into the ground. We didn't stop them when ransacked the treasury so that they could continue to pay huge bonuses as the economy contracted.<br /><br />We deserve to be rolled over and screwed because we never had the collective will to put a stop to it. We didn't take responsibility for our own country and cry out "enough". We just let it happen to us. Now we are paying for our spinelessness. <br /><br />(In case, anyone is wondering where this data comes from, well, it is from the Bank of England's very own Financial Stability Report.)http://ukhousebubble.blogspot.com/2012/07/uk-bank-pre-tax-profits-higher-now-than.htmlnoreply@blogger.com (Alice Cook)10tag:blogger.com,1999:blog-2948538160252327076.post-4660997803569414912Sun, 15 Jul 2012 19:22:00 +00002012-07-15T20:22:57.683+01:00UKUK bankingMore finger pointing and blame-stormingBarclays reckons other banks were also meddling with LIBOR. <a href="http://www.bbc.co.uk/news/business-18848673">From the BBC</a>:<br /><br /><i>Senior managers at Barclays have warned staff in an internal memo that the Libor scandal will envelop other banks. The memo circulated on Friday said that revelations about its rivals would "put in perspective" Barclays' culpability.</i><br /><br />Will other Bank CEOs follow the lead of Bob Diamond and resign? If Bob had to go, then so must others.http://ukhousebubble.blogspot.com/2012/07/more-finger-pointing-and-blame-storming.htmlnoreply@blogger.com (Alice Cook)4tag:blogger.com,1999:blog-2948538160252327076.post-7874724308855808938Sun, 15 Jul 2012 04:59:00 +00002012-07-15T20:30:08.211+01:00UKUK bankingFear and Trembling - the US Justice Department is building a prosecution to hold bankers to account for LIBOR fixingAccording to the New York Times, the US Justice department’s criminal division is preparing cases against several financial institutions and their employees. And yes, that means Barclays and its traders. Indictments could come later this year. <br /><br />The newspaper also reported that UBS could be next to receive the Barclays treatment. The Swiss bank is the next "target for regulatory action". In the coming weeks, we should expect an explosion of early retirements of senior bank officials, along with lost bonuses and a snowstorm of contrite press releases.<br /><a name='more'></a><br /><br />It is early days, but the LIBOR fixing scandal could be the one that finally brings the whole rotten edifice down. In London, the news that the Justice Department are now on the chase has gone down badly. Although the crime was committed here, UK regulators have been slow to pursue the matter .The reluctance is understandable. There is growing evidence that UK officials had at least some knowledge that banks were misbehaving. But they did nothing. This scandalous inactivity may prove to be the final ignominious epitaph for the UK Financial Services Agency.<br /><br />The crime may have been committed here, but victims are worldwide. US victims have every right to seek redress through the US Justice system. LIBOR determines the borrowing costs for trillions of dollars of US financial products, including mortgages, credit cards and student loans. Many US investors would have had to pay more due to Banks manipulating LIBOR to squeeze out extra trading profits. Already US cities, states and municipal agencies are lawyering up. Some have filed suits. <br /><br />The scandal raises the intriguing question whether bankers will be extradited to America for crimes committed here. With one eye on the implications of US warrants issued for UK residents, the authorities here in the UK may wish to accelerate their own investigations. That way they could legally entangle loose-lipped British bankers before they get to New York, where they will be offered plea-bargains in return for accusing other more senior banking staff. Who knows, perhaps some British regulators or even politicians could be named.<br /><br />Bankers went too far with this one. The LIBOR scandal was nothing more than an insider trading scam, run on a global level. Hubris got the better of financial institutions. Bankers thought that they could operate under different rules. They thought they could twist and manipulate interest rates for private gain. There was, however, no thought given as to how their greedy and dishonest schemes would impact the rest of the world. It was as if the rest of us didn't exist or matter.<br /><br />The US Justice Department may be about to change the rules. It is time for fear and trembling in London's financial institutions.http://ukhousebubble.blogspot.com/2012/07/fear-and-trembling-us-justice-is.htmlnoreply@blogger.com (Alice Cook)8tag:blogger.com,1999:blog-2948538160252327076.post-355260002252373944Sat, 14 Jul 2012 23:04:00 +00002012-07-15T00:08:12.324+01:00EUEvil dictators - the body count<div class="separator" style="clear: both; text-align: center;"><a href="http://1.bp.blogspot.com/-j29GQEyVd-o/UAH6-6u-dcI/AAAAAAAADw0/22qG3Ye1o-k/s1600/Dictators.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="494" src="http://1.bp.blogspot.com/-j29GQEyVd-o/UAH6-6u-dcI/AAAAAAAADw0/22qG3Ye1o-k/s640/Dictators.jpg" width="700" /></a></div><br />(click on the graphic for a larger version)<br /><br />Go on....have your say....who was the worst dictator evah....http://ukhousebubble.blogspot.com/2012/07/evil-dictators-body-count.htmlnoreply@blogger.com (Alice Cook)6tag:blogger.com,1999:blog-2948538160252327076.post-7513159056862189043Sat, 14 Jul 2012 22:51:00 +00002012-07-15T20:30:33.440+01:00ECBEUeuroAnother seedy story of theft, tax evasion and dishonestyYou just can't rely on those Swiss bankers any more. There was a time when the wealthy and well connected could open up anonymous numbered bank accounts in Zürich and Geneva, deposit huge sums of money, and no one would ask any questions. You can't do that any more. These days Swiss bankers want to see your passport, 10 years of utility bills, and the contents of your handbag. Even if you manage to open up a dodgy account, an employee in the bank might appropriate your details and sell them to the tax authorities back home.<br /><a name='more'></a><br /><br />The tax authorities in the German state of North Rhine-Westphalia have recently bought a CD from Switzerland containing juicy financial details of over 1,000 wealthy Germans. According to the Financial Times, the Germans paid €3.5 million for financial records held in the Zürich branch of Coutts, a subsidiary of our very own and dearly beloved Royal Bank of Scotland. Presumably, the tax inspectors are hoping for a bumper return on their investment by squeezing those naughty German tax evaders who hid their money in Switzerland.<br /><br />The intriguing question is how did the seller get hold of the original CD. Heaven forbid, could it be that the CD was stolen? That would imply that the German tax authorities were handling stolen goods.<br /><br />Yes, this is a tacky and immoral tale. The German authorities tax their citizens to the limit. However the wealthiest can sneak off to a neighbouring country and hide their cash there. A British bank provides all the operational infrastructure for German tax evasion. The bank promises to maintain the financial confidentiality of its clients. An employee of the bank downloads the data onto a CD. But the motivation for this theft is not outrage at tax evasion. It is an opportunity to make a quick million by selling it to tax authorities, who have no problem benefiting from a criminal act.<br /><br />No one is innocent, all are tainted. It is just another typical story of modern life in Europe.http://ukhousebubble.blogspot.com/2012/07/another-seedy-story-of-theft-tax.htmlnoreply@blogger.com (Alice Cook)2tag:blogger.com,1999:blog-2948538160252327076.post-8726249239324905269Sat, 14 Jul 2012 22:28:00 +00002012-07-14T23:29:53.201+01:00UKUK economyWealth accumulation in the UK - very few of us succeed in doing it.We come into this world with nothing. We leave it with nothing. In between, we can accumulate wealth.<br /><br />According to the UK statistics office, at least a quarter of households can not even do that. Around 24 percent of families are upside down; their financial assets (bank accounts, savings, shares, etc) is less than the money they owe in loans.<br /><br />Median net household wealth is about £5,000, which is in the grand scheme of global wealth accumulation is bugger all. <br /><br />Around 80 percent of households have net financial wealth of £50,000 or less. Does £50k sound like a lot? Perhaps it is my la-di-da London upbringing, but that doesn't sound like much. It certainly wouldn't last long in the Capital. <br /><br />So according to the UK statistics office, we come in with nothing, few of us accumulate much wealth, and we all leave with nothing.http://ukhousebubble.blogspot.com/2012/07/we-come-into-this-world-with-nothing.htmlnoreply@blogger.com (Alice Cook)6tag:blogger.com,1999:blog-2948538160252327076.post-5385850326491964441Fri, 13 Jul 2012 02:39:00 +00002012-07-13T03:39:14.986+01:00UKUK bankingUK economyLIBOR scandal may cost banks $22 billionAnalysts at Morgan Stanley opened up an Excel spreadsheet and tried to calculate the potential costs of the the LIBOR scandal. Potentially 11 bans are in frame for a mega-fine from US and UK regulators. Morgan Stanley reckon that banks could be hit with fines and penalties amounting to $22 billion.<br /><br />However, will any banker actually go to jail? So far, it doesn't seem like it.<br /><br />We want to see a sizable number of these villains taking the perp walk. We need to see a couple of high profile early morning raids in Mayfair. The authorities need to apply the heavy boot of policemen upon the doors of those devious bankers responsible for fixing LIBOR.<br /><br />The time for fines is over. We need to see arrests.http://ukhousebubble.blogspot.com/2012/07/libor-scandal-may-cost-banks-22-billion.htmlnoreply@blogger.com (Alice Cook)7tag:blogger.com,1999:blog-2948538160252327076.post-2305213522968384794Fri, 13 Jul 2012 02:29:00 +00002012-07-13T03:30:24.960+01:00UK economyUK housingUK house prices - as flat as a board<div class="separator" style="clear: both; text-align: center;"><a href="http://1.bp.blogspot.com/-ja5fgWBKJZY/T_4yY7D2xOI/AAAAAAAADwk/tU_12VMt7fs/s1600/UK-house-prices.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="465" src="http://1.bp.blogspot.com/-ja5fgWBKJZY/T_4yY7D2xOI/AAAAAAAADwk/tU_12VMt7fs/s640/UK-house-prices.gif" width="640" /></a></div><br />UK house prices have been flat for two years. One month - the index is up a tadge, the next month it is down. <br /><br />Don't you miss those conversations about the never ending increases in house prices. Where are those Estate Agents who would assure you that prices could never fall? The national obsession with property seems to be over. <br /><br />I really should deflate house prices with inflation. How far have prices fallen in real terms? Perhaps next week, I will post an inflation adjusted chart.http://ukhousebubble.blogspot.com/2012/07/uk-house-prices-as-flat-as-board.htmlnoreply@blogger.com (Alice Cook)10tag:blogger.com,1999:blog-2948538160252327076.post-6207302510163529875Wed, 11 Jul 2012 04:21:00 +00002012-07-11T12:52:27.268+01:00UKUK bankingUK economyUS housing bubbleBarclays caught selling dodgy hedging products to small firmsThe mainstream media were too caught up in the excitement surrounding the LIBOR scandal. The following judgement from the FSA largely remained under the radar screen:<br /><br /><i>The FSA has today announced that it has found serious failings in the sale of interest rate hedging products to some small and medium sized businesses (SMEs). We believe that this has resulted in a severe impact on a large number of these businesses. In order to provide as swift a solution to this problem as possible we have today confirmed that we have reached agreement with Barclays, HSBC, Lloyds and RBS to provide appropriate redress where mis-selling has occurred.</i><br /><br />The FSA found a range of poor sales practices including: Poor disclosure of exit costs; a failure to ascertain the customers’ understanding of risk; non-advised sales straying into advice; “Over-hedging” (i.e. where the amounts and/or duration did not match the underlying loans.<br /><br />The FSA concluded that "rewards and incentives" were the driver of these practices. Really???http://ukhousebubble.blogspot.com/2012/07/barclays-caught-selling-dodgy-hedging.htmlnoreply@blogger.com (Alice Cook)5tag:blogger.com,1999:blog-2948538160252327076.post-3234184134307623642Wed, 11 Jul 2012 04:05:00 +00002012-07-11T05:42:32.133+01:00UKUK bankingUK economyDiamond walks away with two million quidThis weekend was a time for financial settlements. Katie Holmes settled with Tom Cruise while Bob Diamond squared things away with Barclays. I wonder who did better financially? Katie or Bob?<br /><br />We know how much Bob received. He walked away with two million. He received that princely sum as a going-away gift from Barclays.<br /><br />He left the bank in a parlous state. Since 2007, the share prices has crashed from $60 to $10. The LIBOR fixing scandal has destroyed the Bank's reputation. The Serious Fraud Squad is sniffing around, looking to build up a criminal prosecution. Meanwhile, over in America, hungry lawyers are ready to tear the Bank apart with litigation. <br /><br />If this litany of disaster wasn't enough, we found out yesterday that the FSA had grave reservations about Bob Diamond's leadership at Barclays. Lord Turner, FSA chairman, &nbsp;described “the cumulative impression created by a pattern of behaviour over the past few years”, during which Barclays overused “complex structures” and took an "aggressive” stance on rules and regulations. It turns out that this aggressive stance towards regulation included misrepresenting LIBOR.<br /><br />The irony is that the Barclays board think that they have held Mr.Diamond to account. After all, he was meant to receive £20 million in various bonuses. However, the Barclays board found a way to hold back £18 million. Of course, £20 million is better than £2 million, but in the grand scheme of things, does that kind of loss really matter to a man that has already trousered over £100 million since he became head of the bank? <br /><br />The great lesson from all of this is that there is no accountability anymore. A CEO can run a bank into the ground and still walk away with a multi-million pound settlement. That is how it works in Britain today.http://ukhousebubble.blogspot.com/2012/07/diamond-walks-away-with-two-million.htmlnoreply@blogger.com (Alice Cook)3tag:blogger.com,1999:blog-2948538160252327076.post-6192686876453218228Tue, 10 Jul 2012 02:22:00 +00002012-07-10T05:14:02.364+01:00UKUK bankingUK economyTucker maps out the road to ruinPaul Tucker came down firmly on the side of New Labour today. In his evidence to the Treasury select committee, he denied that Labour ministers were involved in fixing LIBOR. George Osborne thinks otherwise. To which I say "so what". The Osborne versus Balls dingdong is a distraction. <br /><br />The real story was the rest of Tucker's testimony. It was surreal. No, it was worse than that. It was a financial horror story. He conjured up nightmares and vistas that were unimaginable a month ago.<br /><br />Tucker told the committee that the FSA is currently working through the implications that LIBOR could "collapse". This would cut the derivatives market adrift from its LIBOR pricing reference point. The notional value of the LIBOR dependent derivatives market is about $360 trillion. For comparision, Global GDP is a trival $70 trillion. Is this a likely event? What would be the consequences? Who knows? But it is the issue currently taxing the UK financial sector regulalator right now. <br /><br />If that little scenario didn't frighten you, Tucker had another grenade in his pocket. He moved on to the question of LIBOR-related law suits. Again, the FSA is looking into the possibility that British banks would be hit by massive class-action law suits that could potentially ruin the UK financial sector.<br /><br />Tucker then produced a third cracker. He wasn't confident that LIBOR tampering had stopped. UK banks could still be at it. Despite everything, the Banks may not have cleared things up. The implication must be that other banks could find themselves going through the same upheavals as Barclays.<br /><br />He then argued that the FSA review into the scandal should be extended to other "self-certifying markets" where banks are fixing and minitoring prices. These markets include the gold and oil markets.<br /><br />So while the Conservatives and New Labour are thrashing about with a tedious "he said, she said" pantomine, the deputy governor of the Bank of England told us four frightening possiblities about the UK financial system. First, the derivatives market could implode. Second, British banks may be confronted by ruinous legal action that threatens to bankrupt them. Third, Banks could still be meddling with LIBOR. Finally, he hinted that the abuse could extend to other key financial markets.<br /><br />The juxtaposition of political ineptitude and financial and economic ruin could not be more stark.http://ukhousebubble.blogspot.com/2012/07/tucker-maps-out-road-to-ruin.htmlnoreply@blogger.com (Alice Cook)7tag:blogger.com,1999:blog-2948538160252327076.post-1182029728618198872Thu, 05 Jul 2012 12:42:00 +00002012-07-05T13:43:47.449+01:00UK economyHere we go again...More quantitative easing.<br /><br />Today, the Bank of England announced that it will print a further £50 billion, bringing their total of newly minted funny money to £375 billion. <br /><br />It is not as if that last tranche of newly minted money made much difference. <a href="http://www.bankofengland.co.uk/publications/Pages/news/2012/066.aspx">As the Bank of England's press release pointed out; the economy is in a bad way. </a><br /><br /><i>UK output has barely grown for a year and a half and is estimated to have fallen in both of the past two quarters. The pace of expansion in most of the United Kingdom’s main export markets also appears to have slowed. Business indicators point to a continuation of that weakness in the near term, both at home and abroad. In spite of the progress made at the latest European Council, concerns remain about the indebtedness and competitiveness of several euro-area economies, and that is weighing on confidence here. The correspondingly weaker outlook for UK output growth means that the margin of economic slack is likely to be greater and more persistent.</i><br /><br />When confronted with this appalling list of dismal economic indicators, one might think it was time for a change in policies. Not so. It will be more of the same.http://ukhousebubble.blogspot.com/2012/07/here-we-go-again.htmlnoreply@blogger.com (Alice Cook)9tag:blogger.com,1999:blog-2948538160252327076.post-741315895250995563Wed, 04 Jul 2012 13:20:00 +00002012-07-04T14:20:56.266+01:00EUeuro'Hold the holidays, we'll be back in August' - Nigel Farage<iframe allowfullscreen="" frameborder="0" height="315" src="http://www.youtube.com/embed/VdGShE3Ku7k" width="560"></iframe>http://ukhousebubble.blogspot.com/2012/07/hold-holidays-well-be-back-in-august.htmlnoreply@blogger.com (Alice Cook)3tag:blogger.com,1999:blog-2948538160252327076.post-1134576215181912764Wed, 04 Jul 2012 04:02:00 +00002012-07-04T05:05:54.572+01:00EUThe European Union's job creation activities this week....More than one in three young Italians are out of work.&nbsp;Over half of all Spaniards under 25 are unemployed. It is a similar number in Greece.<br /><br />Everyday, the European Union pumps out regulations imposing costs on firms, discouraging employment creation, and generally making life unbearably difficult for the continent's small and medium sized enterprises.<br /><br />During the last few days, the EU passed legislation on the following five issues:<br /><ul><li>A regulation approving the active substance bifenthrin, concerning the placing of plant protection products on the market.</li></ul><ul><li>New correction coefficients applicable to the remuneration and pensions of officials and other servants of the European Union.</li></ul><ul><li>Certain detailed rules for the implementation of protected designations of origin and geographical indications, traditional terms,&nbsp;labeling&nbsp;and presentation of certain wine sector products.</li></ul><ul><li>Regulations establishing the standard import values for determining the entry price of certain fruit and vegetables</li></ul><ul><li>Regulations for fixing the import duties in the cereals sector applicable from 1 July 2012.</li></ul>Do you think any of this nonsense produced a single job for a young European? <br /><br />There is nothing remarkable about this list of foolishness. &nbsp;The Commission produces legislation every day; regulating, fixing, and formulating new rules that slowly strangle the entrepreneurial spirit of the continent.http://ukhousebubble.blogspot.com/2012/07/european-unions-job-creation-activities.htmlnoreply@blogger.com (Alice Cook)5tag:blogger.com,1999:blog-2948538160252327076.post-7914224197741892666Wed, 04 Jul 2012 03:47:00 +00002012-07-04T05:11:45.196+01:00Banking CorruptionUK economyIt might be time for Barclays to get lawyered upI wonder how long it will be before Barclays finds itself facing litigation over its LIBOR fixing scam. The US is a nation of enterprising, hungry and ruthless lawyers who must now look upon Barclays rather like a pack of hyenas gaze upon a sickly&nbsp;wilder-beast. &nbsp;The sweet smell of blood is wafting across the&nbsp;Savannah.....<br /><br />As we have all learned over the last few days that LIBOR is the key interest rate that determines pricing in the derivatives market. Since Barclays fixed the LIBOR for its own interests, it must also follow that many participants in the derivatives market lost money.<br /><br />Moreover, it can't be that difficult to prove it. Simply dust down that old derivatives contract, look at the date, check what the price would have been if LIBOR had not been manipulated. If any money was lost, then simply hire a lawyer, and file a suit against Barclays. What could be simpler?<br /><br />Barclays have already conceded that they fixed the market.Frankly, the bank will find it difficult to mount any kind of serious defence in court.<br /><br />Now here is the rub; the derivatives market is huge. It is measured in hundreds of trillions of dollars. There must be billions of dollars worth of losses related to this LIBOR issue. Does Barclays have the balance sheet to suck up the inevitable costs that will come from a series of massive and seemingly legitimate lawsuits.<br /><br />Barclays could end up looking like Arthur Andersen after the Enron collapse.http://ukhousebubble.blogspot.com/2012/07/it-might-be-time-for-barclays-to-get.htmlnoreply@blogger.com (Alice Cook)3tag:blogger.com,1999:blog-2948538160252327076.post-1189519019279967662Wed, 04 Jul 2012 03:39:00 +00002012-07-04T04:39:39.521+01:00Banking CorruptionAnother day, another banking scandalThis time it is JP Morgan. From today's Financial Times:<br /><br /><i>The US electricity regulator has subpoenaed JPMorgan Chase twice in the past three months as it investigates whether the bank manipulated power markets in California and the Midwest region, court filings showed.<br /><br />The Federal Energy Regulatory Commission revealed the probe in court papers filed on Monday that said the bank’s bidding practices may have inflated electricity costs by at least $73m.</i><br /><br />What? Only $73 million? For JP Morgan, it is hardly worth getting out of bed.http://ukhousebubble.blogspot.com/2012/07/another-day-another-banking-scandal.htmlnoreply@blogger.com (Alice Cook)1tag:blogger.com,1999:blog-2948538160252327076.post-3596269965451136157Tue, 03 Jul 2012 12:26:00 +00002012-07-03T13:26:56.417+01:00UK bankingBarclays - I knew it would be goodSo farewell BoB Diamond, your time is up. <br /><br />Yesterday, Mr. Diamond threatened the FSA and the Bank of England with a reveal-all appearance at the Parliamentary Treasury Committee. Smart strategic move Bob; it guaranteed your dismissal. <br /><br />What was he thinking? Attacking the FSA and the BoE? Did he think that they were going to sit there and suck it up like some underling at Barclays. No Bob, that is not how it works. They get you....<br /><br />When Bob finally gets his moment before the Committee, his accusations of official collusion will seem like sour grapes. It will come from a Man who was ignominiously hoofed out of his job, but not before he threw the chairman under a bus. He will lack credibility.<br /><br />Besides, we all know that there was a moment when the authorities knew about some crisis related LIBOR fixing. We also understand that for a few short weeks it was probably necessary. However, we also know that Barclays was fiddling LIBOR for personal profit for years. Finally, we also know that other banks were at it, and none of this knowledge provides one jot of justification for why Mr. Diamond should keep his job. <br /><br />So, it is all over for Bob. However, there are other demon bankers on the horizon. Who will be next?http://ukhousebubble.blogspot.com/2012/07/barclays-i-knew-it-would-be-good.htmlnoreply@blogger.com (Alice Cook)3tag:blogger.com,1999:blog-2948538160252327076.post-1330595819305921914Tue, 03 Jul 2012 02:57:00 +00002012-07-03T04:05:33.134+01:00UKAnother UK firm, another scandalIt was hard to read the US judgement against the UK pharmaceuticals firm Glaxo Smith Kline without a deep sense of shame. The firm perpetrated the largest case of fraud in US healthcare history. That is quite an achievement, given the outrageous behaviour of other pharmaceuticals firms. <br /><br />The firm illegally promoted antidepressants by paying off US doctors through lavish entertainment, free holidays disguised as conferences, and cash payments disguised as consulting fees. One Sales Rep described one the Glaxo products as the “happy, horny, skinny pill”. I know, it sounds like the wonder pill that every teenager needs. Glaxo tried to get doctors to write a prescription for every teen in America. They marketed their drugs by taking doctors on diving trips, golfing holidays, balloon rides, deep-sea fishing and tours of the Bacardi rum distillery. It was a "dope up a teen and get a free holiday" deal. <br /><br />The fine might seem commensurate with the crime. The firm will have to pay over $3 billion. However, who is being punished here? This money will come out of the profits of the firm, which would have be distributed to shareholders in the form of dividends and tax revenues to the various government where Glaxo operates. <br /><br />The only crime committed by the shareholders was to buy equity in a firm that was secretly buying off doctors to over-prescribe happy pills. I might be wrong, but I doubt that information was made available to the shareholders when they were purchasing their Glaxo stock. The shareholders didn't sanction this behaviour. That was an internal decision, presumably motivated by bonuses and generous remuneration packages.<br /><br />The US government will receive the proceeds from the $3 billion fine. But it would have received a large chunk of that cash anyway. Absent this huge fine, the UK government would have received part of these proceeds in the form of taxation. Now that will not happen. Returning to the question, who was punished; UK taxpayers and hapless investors seems to be the answer.<br /><br />Ultimately, this isn't the sort of punishment that deters bad behaviour. The sales reps have probably moved on to other firms. As for the Glaxo Management, perhaps the company sacrificed a few unwanted executives. But is there any reason to think that the company wouldn't pull a similar scam again? I don't think so.http://ukhousebubble.blogspot.com/2012/07/another-uk-firm-another-scandal.htmlnoreply@blogger.com (Alice Cook)9